Indonesia Stock Market May Reverse Wednesday's Gains

The Indonesia stock market has moved higher now in back-to-back sessions, rising almost 50 points or 1.2 percent along the way. The Jakarta Composite Index ended just above the 4,350-point plateau, although now traders are bracing for renewed selling pressure when the market opens on Thursday.

The global forecast for the Asian markets is negative on renewed concerns about the deficit woes in the United States and weakening economic activity in Europe. Selling pressure may follow the news that President Barack Obama won re-election in the U.S., defeating Republican challenger Mitt Romney. Adding to the cautious sentiment, European Central Bank President Mario Draghi said that European economic activity is expected to remain weak in the near term. The European and U.S. markets were firmly in the red and the Asian bourses are tipped to follow that lead.

The JCI finished modestly higher on Wednesday following gains from the financial shares and automobile producers.

For the day, the index climbed 36.16 points or 0.84 percent to finish at 4350.42 after trading between 4,317.34 and 4,350.59. Volume was 3.9 billion shares worth 3.9 trillion rupiah. There were 146 gainers and 91 decliners.

Among the gainers, Bank Rakyat jumped 2.84 percent, while Bank Mandiri climbed 1.79 percent and Semen Gresik added 1.02 percent.

The lead from Wall Street is broadly negative as stocks moved sharply lower on Wednesday after ending the two previous sessions mostly higher, as focus quickly shifted to the looming fiscal cliff and the possibility of higher taxes following President Obama's re-election.

With the steep losses, the major averages all ended the session at their worst closing levels in three months. Obama's definitive victory helped to eliminate some uncertainty, but traders continued to worry about the upcoming fiscal cliff, which could inflict higher taxes and significant spending cuts.

Credit ratings agency Fitch Ratings said failure to avoid the fiscal cliff and raise the debt ceiling in a timely manner as well as secure an agreement on credible deficit reduction would likely result in a rating downgrade for the U.S. in 2013.

Lingering concerns about the financial situation in Europe also weighed on the markets, with European Central Bank President Mario Draghi saying European economic activity is weak and is expected to remain weak in the near term.

In a speech in Frankfurt, Draghi also said the latest data suggest that the problems in the eurozone are now starting to affect the German economy, which had previously been insulated from some of the difficulties.

The major U.S. averages finished sharply lower on Wednesday as the Dow plummeted 312.95 points or 2.4 percent to finish at 12,932.73, while the NASDAQ tumbled 74.64 points or 2.5 percent to end at 2,937.29 and the S&P 500 plunged 33.86 points or 2.4 percent to close at 1,394.53.

In economic news, Indonesia will on Thursday conclude its monetary policy meeting and then announce its decision on interest rates, with forecasts suggesting no change from the current rate of 5.75 percent.